Last time I looked, the Daemon ISO Mounting Tool didn’t work for Windows 7, just looked again today and now Windows 7 is supported and it actually works:
http://www.disk-tools.com/download/daemon
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Used to be a great fan of Daemon tools, especially as they were one of the first to support Vista (even in Beta/RC). However had to find an alternative when it came to Win7 as they did not support it at all throught the beta/rc process.
Now use Virtual CloneDrive from ElaborateBytes. Just as good in my opinion.
I used to use daemon tools, but they bundle so many other bits of software. I would personally recommend Virtual Clone Drive: http://www.slysoft.com/en/virtual-clonedrive.html
One tool I personally perfer to mount ISO and other disc images is the freeware Virtual CloneDrive from Slysoft. I’m not affiliated with them in any fashion, just think it’s a better product.
I can highly recommend Gizmo Drive – I started using it one year ago, it got tons of features\supported formats and is available for free…
I have to go with Mark and Adam on this one. I used to use Daemon tools all the time, but after they decided to keep bundling crap and making it deceptive to install I switched to Slysoft’s offering. It is better IMHO. Unless you really need to emulate a particular DRM protection for games, there is no reason to use Daemon Tools anymore – Slysoft’s is just better.
I personally prefer MagicDisc (http://www.magiciso.com/tutorials/miso-magicdisc-overview.htm) over Daemon Tools and Virtual CloneDrive although I do like Gizmo Drive.
Alcohol 52% is a free option too and it doesn’t require additional software to be running in the background.